BITCOIN FLASH CRASH

Bitcoin slid to as low as $9,000 in volatile trade on Thursday, having lost more than a fifth of its value since hitting an all-time high of $11,395 on Wednesday. One market-watcher attributed the fall to outages in bitcoin exchanges and the heavy price surge of recent times.

Bitcoin on Wednesday dropped to about $9,200, from an all-time high of about $11,400, after many users found themselves locked out of two of the biggest cryptocurrency exchanges in the US.

The digital exchanges Coinbase and Gemini crashed on Wednesday after bitcoin prices surged above $11,000 per coin early in the morning. People also reported being locked out of accounts on GDAX, Coinbase’s professional trading platform, and Bitstamp, a bitcoin exchange based in Luxembourg.

Rita Scott’s grandson convinced her in mid-November to get in on the latest investing sensation and buy bitcoin. “I thought it was a big coin,” the 70-year-old said. “I didn’t even know what it was, a piece of coin? Why would I invest in a piece of coin?”

With a few hundred dollars of her money invested in it, Ms. Scott quickly caught on and started checking the price several times a day, even while playing poker at a casino in her hometown of Las Vegas.

Late Monday, as the price approached $10,000 for the first time, her grandson, Anthony Santa, sold the bitcoin that he and his grandmother held, netting what he said was a gain of around 45% over just a few weeks.

That was prescient. While bitcoin later topped the $11,000 mark—reaching its highest level in its nine-year history—the virtual currency tumbled more than $2,000 later Wednesday as several exchanges struggled to handle surging volume. It rallied again later to trade at $10,214.

Though Icahn stressed that he “just doesn’t get” the mania surrounding the novel cryptocurrency, he did compare the dramatic appreciation of bitcoin to a famous land bubble in the 18th century.

“It’s sort of amazing to me,” Icahn said Thursday on “Halftime Report.” “If you read history books about all these bubbles, like in Mississippi — where John Law went around selling all this land in Mississippi that was sort of worthless and the French were going crazy giving him all this money. And then one night it all blew up … to me, this is what this is.”

PwC in Hong Kong said that it accepted the payment because it is increasingly working with startups in the city involved in cryptocurrencies and blockchain, the open-ledger technology that processes bitcoin transactions by logging them on a public record. The firm also noted its advisory work in areas such as initial coin offerings, cryptos exchanges and crypto funds.

Bitcoin is red-hot, having gained over 1,000% this year. But a survey of bitcoin holders by LendEdu, a student loan comparison website, shows that Americans who already own bitcoin would really rather own the asset using a more convenient vehicle, like in an exchange-traded fund (ETF).

Bitcoin is a commodity with many similarities to gold, and the volatility that has sparked investor concern stems mainly from its lack of liquidity, said Jeff Currie, global head of commodities research for Goldman Sachs Group Inc.

According to new research from Chainalysis, a digital forensics firm that studies the bitcoin blockchain, 3.79 million bitcoins are already gone for good based on a high estimate—and 2.78 million based on a low one. Those numbers imply 17% to 23% of existing bitcoins, which are today worth around $8,500 each, are lost.

A California federal court has ordered Coinbase to turn over identifying records for all users who have bought, sold, sent, or received more than $20,000 through their accounts in a single year between 2013 and 2015. Coinbase estimates that 14,355 users meet the government’s requirements.

Markets responded positively to reports that Republicans were making progress on President Trump’s legislation to reduce corporate taxes. News reports that Sen. John McCain (R-Ariz.) was backing the plan gave supporters hope that the GOP may get enough votes for passage.

US-UK TRUMP RETWEET UPROAR

Again and again, Trump veered far past the guardrails of presidential behavior. But despite the now-routine condemnations, the president is acting emboldened, as if he were impervious to the uproar he causes.

If there are consequences for his actions, Trump does not seem to feel their burden personally. The Republican tax bill appears on track for passage, putting the president on the cusp of his first major legislative achievement. Trump himself remains the ­highest-profile man accused of sexual improprieties to keep his job with no repercussions.

Trump has internalized the belief that he can largely operate with impunity, people close to him said. His political base cheers him on. Fellow Republican leaders largely stand by him. His staff scrambles to explain away his misbehavior — or even to laugh it off. And the White House disciplinarian, chief of staff John F. Kelly, has said it is not his job to control the president.

One member of Parliament called him a “fascist.” Another described him as “stupid.” A third wondered aloud whether President Trump was “racist, incompetent or unthinking — or all three.”

The stream of criticism that began after Mr. Trump shared anti-Muslim videos from a far-right British group on Wednesday morning turned into a gusher on Thursday, after he rebuked Prime Minister Theresa May in a nighttime tweet, telling her: “Don’t focus on me, focus on the destructive Radical Islamic Terrorism that is taking place within the United Kingdom.”

Mr. Trump’s one-two punch managed to generate rare unanimity in a Britain that is deeply divided over the contentious process of leaving the European Union.

The British revolt against President Trump swelled Thursday with Parliament members openly deriding him and Britain’s prime minister standing by her denunciations of Trump’s retweets of a fringe group’s anti-Muslim videos.

London’s mayor, Sadiq Khan, said in a statement Thursday that Trump’s original tweets had betrayed the “special relationship” between the two countries. “President Trump yesterday used Twitter to promote a vile, extremist group that exists solely to sow division and hatred in our country,” said Khan. The mayor then called on May to cancel any plans to receive Trump on an official visit.

Britain First, which believes that white Christian civilization is under threat from Islam, had been marginal. Now it has gotten an unexpected lift from the White House.

“On the scale of far-right groups this is one on the very far right,” Mr. Goodwin said, citing tactics like what the group calls “invasions” of mosques. “Britain First is seen as a pseudo-paramilitary group.”

GOP TAX PLAN

Corker and Flake demanded the bill be fundamentally changed to add tax revenue back into the package, a concern that had become heightened because just minutes earlier the Joint Committee on Taxation found that the plan would add at least $1 trillion to the debt over 10 years.

Senate Republicans are scrambling to figure out how to offset the deficit effects of the bill after the Senate parliamentarian rejected a trigger mechanism that would have automatically increased taxes if revenue growth projections were not met.

Among the ideas being discussed are reinstating the alternative minimum tax, or A.M.T., on C-corporations and some high net worth individuals. There is also discussion about increasing the corporate tax rate above the 20 percent over a period of years, an idea that Republicans are calling “stair-stepping.” This would involve slowly raising the rate after some time, though it is unclear when it would take place.

Support from Arizona senator John McCain added to the momentum behind the Republican tax plan on Thursday even as a key congressional watchdog said the overhaul would drive up the US federal government’s deficit.

The support of Mr McCain, who helped kill his party’s attempt to repeal Obamacare earlier this year, brought the GOP closer to the 50 votes it needs to get its sweeping plan through the Senate.

The Senate Republican tax plan would modestly expand the economy but cover less than a third of its cost, failing to meet the party’s promise that it will pay for itself through faster growth, according to an official congressional analysis.

“I suspect that most foreign groups doing business in the U.S. will be negatively affected,” said Stef van Weeghel, global tax policy leader at accounting firm PricewaterhouseCoopers LLP. For most foreign multinationals, the U.S. still represents one of the world’s biggest, most important markets—so tax hits there can have outsize impact on global profit.

Those inside Treasury’s Office of Tax Policy, which Mr. Mnuchin has credited with running the models, say they have been largely shut out of the process and are not working on the type of detailed analysis that he has mentioned. An economist at the Office of Tax Analysis, who spoke on the condition of anonymity so as not to jeopardize his job, said Treasury had not released a “dynamic” analysis showing that the tax plan would be paid for with economic growth because one did not exist.

NORTH KOREA

Of course, no American official is prepared to admit that the United States is willing, however unhappily, to rely on conventional deterrence and live with a North Korean nuclear missile capability that can reach American shores as well. After all, a succession of American presidents, from Bill Clinton to George W. Bush to Barack Obama, have all said that would be intolerable.

But clearly that appears to be where the United States is headed. While Secretary of State Rex W. Tillerson said in Beijing at the end of September that he had several lines of communication open to the North Korean leadership, he has left unclear what the goal of any talks with Pyongyang might be. Getting North Korea to completely disarm, his aides conceded, is not remotely possible — and the North has rejected any talks that involve giving up its arsenal.

After firing an intercontinental ballistic missile higher than ever before, North Korea this week said it had mastered nuclear-strike capability and become a full-fledged nuclear state. That claim was immediately met with skepticism, not least in the White House.

But by showing that its missiles can reach Washington — even if there is doubt that North Korea can deliver a nuclear warhead there — Pyongyang took yet another step toward that goal. Its latest test raised a question the United States and its allies seem likely to have to answer sooner or later: Is it time to accept that North Korea will never give up its nuclear arms, and try to reach a deal to stop its arsenal from growing further?

STATE DEPARTMENT SHAKE-UP RUMORS

President Donald Trump is contemplating replacing Rex Tillerson as secretary of state with Mike Pompeo, the director of the Central Intelligence Agency, according to US media reports, because of the increasingly sour relationship between them.

President Trump declined to put to rest the possibility of an imminent departure by Secretary of State Rex Tillerson, after a news report said the former oil executive could be pushed out within weeks.

The plan, hatched by White House Chief of Staff John F. Kelly, is expected to be set in motion over the next few weeks, and it has broad support within Trump’s inner circle, the officials said. But it was unclear whether Trump had signed off on the plan yet; the president has been known to change his mind about personnel and other matters before finalizing decisions with public announcements.

Since well before the White House plan to replace Secretary of State Tillerson with CIA Director Mike Pompeo became public Thursday, Pompeo had been informally preparing to take over in Foggy Bottom, reaching out to potential candidates for positions and collecting ideas.

TRADE TENSIONS

Donald Trump’s administration has put its main programme for bolstering economic relations with China on ice as it complains about the two countries’ swollen trade imbalance and says Beijing’s efforts to liberalise its economy have gone into reverse.

The administration’s disenchantment comes even as Mr Trump attempts to convince Beijing to pressure North Korea over its nuclear missile programme. The White House is taking an increasingly confrontational approach in its economic relations, including by opposing China’s bid for recognition as a “market economy” in the World Trade Organisation.

The Def Jam Recordings co-founder said his recollection of the evening differs from screenwriter Jenny Lumet’s account, published by the Hollywood Reporter. While Simmons had strongly disputed Khalighi’s account, he announced Thursday his exit from his various companies in light of Lumet’s essay.

RUSSIAN GOINGS ON

Fewer than half of Russians with HIV are taking antiretroviral drugs, in part because of a conspiracy theory that the AIDS-causing virus is a myth invented by the West, officials and activists say. While AIDS-related deaths and new HIV infections are falling across the globe, in Eastern Europe and Central Asia statistics grow more alarming by the year.

Russian diplomats delivered a message for those who want to ban killer robots: Russia will build them no matter what. That is the sum total of what happened during a week of discussion on the issue of weapons and vehicles operated by artificial intelligence in Geneva.

BATTERY POWER

“This fits into his M.O. of doing these big, grandstanding things to get attention for the company and the technology that he’s building,” said Ashlee Vance, the author of a 2015 biography of Mr. Musk. “Tesla’s at this really critical stage where they’re trying to be both a car company and an energy company at the same time.”

Australia is a fitting target for Mr. Musk. The country is the world’s largest exporter of coal. By most measures, it is the sunniest continent on earth. It has abundant wind and hydroelectric power capabilities. And yet the cost of electricity in Australia increased 20 percent from 2012 to 2016, and Australians this year paid between 50 and 100 percent more for their power than Americans, according to experts.

South Korea’s Hyundai Electric & Energy Systems Co. is building a 150-megawatt lithium-ion unit, 50 percent larger than Musk’s, that the company says will go live in about three months in Ulsan near the southeast coast.

With battery prices tumbling by almost half since 2014, large-scale projects are popping up around the world. Developers have announced lithium-ion battery projects with total capacity of 1,650 megawatts per hour in 2017, four times the amount for all of 2016, according to Bloomberg New Energy Finance.

The rapid rise of wind and natural gas as sources of electricity is roiling U.S. power markets, forcing more companies to close older generating plants. Wholesale electricity prices are falling near historic lows in parts of the country with competitive power markets, as demand for electricity remains stagnant while newer, less-expensive generating facilities continue to come online.

An analysis by investment bank Lazard shows that on an unsubsidized basis and over the lifetime of a facility in North America, it costs about $60 to generate a megawatt hour of electricity using a combined-cycle natural-gas plant, compared with $102 burning coal and nearly $150 using nuclear. By that criteria, Lazard estimates electricity from utility-scale solar and wind facilities is now even cheaper than gas.

Emerging market countries, banks and companies are selling long-dated debt in record volumes as investors’ search for yield pushes them to expand their appetite for risk.

With markets set to remain open for business for another couple of weeks before winding down to year-end, syndicated sales of paper with maturities of 10 years and more has hit a record high in emerging economies, topping $500bn for the first time according to figures from Dealogic, a data provider.

A widening gap between official and market interest rates in China is making it harder for Beijing to use a key policy tool to manage the world’s second-largest economy.

Short-term interest rates in China’s money market have persistently been above those set by the central bank in the past year, as investors and banks spooked by the government’s crackdown on the country’s high levels of leverage have charged more to lend both to each other and external borrowers.

Following a relatively calm summer, the gap has started widening again in the past two months.

Investors and banks use repurchase agreements, or repos, to borrow large amounts of short-term cash safely, by selling a security and pledging to buy it back at a slightly higher price in the near future. On the other side of that trade, it provides cash-rich asset managers with a safe place to put money.

This market played a central role in the crisis, when it froze as investors questioned the safety of the securities being lent. Post-2008 regulations made it more expensive for banks to get involved, further denting a market that relies on these institutions to act as middlemen.

Now banks are beginning to return to that role while investors need safe places to store their cash.

MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS

American officials and many experts have assumed North Korea would not enter into serious negotiations until it achieved its nuclear ambitions. Therefore, the reasoning goes, if Mr. Kim is as pleased with the program as his statements suggest, now may be the time for the Trump administration, either directly or through intermediaries, to test again whether there’s a chance for serious dialogue.

The situation is, to put it mildly, fragile. Mr. Trump has responded to North Korea’s nuclear progress with threats of military options, tighter sanctions and demands that China increase pressure on the North. North Korea effectively shut down communications, including unofficial contacts, with the United States after Mr. Trump threatened in his September speech to the United Nations to destroy North Korea and launched a personal attack on Mr. Kim. Senator Lindsey Graham, Republican of South Carolina, said on CNN, “We’re headed toward a war if things don’t change.”

After the latest test, Mr. Trump called Mr. Kim a “sick puppy” and promised tighter sanctions but generally was more temperate than usual. Also encouraging was Secretary of State Rex Tillerson’s assurance that “diplomatic options remain viable and open,” although he added a crucial caveat: “for now.”

If there is any hope of easing the tension and avoiding serious confrontation, each side will have to make a move toward the other.

Bitcoin and bubble have become virtually synonymous in the minds of many skeptics during this year’s breathtaking rally. While the digital currency has defied doomsday prophesies, there’s a number of ways this party could end badly for the swelling ranks of bulls.

Knifed by a Fork — The multiple offshoots of bitcoin could cause the world’s largest digital currency by market value to cede its crown.

Strangled by Regulators — Given bitcoin’s checkered history as the means to purchase illicit materials, a vehicle for capital flight, and a victim of theft, it’s no surprise that regulators around the world have cast a watchful eye over the asset class.

Hacked to Pieces — Ever since the 2011 breach of the Mt. Gox exchange, bitcoin owners have had to face the possibility that this intangible asset may fall into the hands of hackers.

A Short Demise — The introduction of bitcoin futures could also prove detrimental to its valuation should clearing organizations come under stress amid the digital currency’s wild swings.

Pass Away on Profit-Taking — The failure of major cryptocurrency exchanges such as Coinbase to handle traffic on the day bitcoin breached $11,000 throws into sharp focus the scalability problems that cryptocurrencies face as speculative vehicles.

Death by ¯_(ツ)_/¯ — It’s been a puzzle to explain why bitcoin’s gone parabolic. Why would we expect the way down to be any different?

My scepticism does not concern blockchain, the technology behind bitcoin. This distributed ledger technology is a welcome innovation with useful applications, including fast, automatic execution of smart contracts. What worries me are the cryptocurrencies themselves. Bitcoin raises two distinct questions. Is it sustainable? And assuming it is, does it contribute to the common good? My answers are: probably not (the jury is still out) and definitely not.

On the sustainability question, bitcoin is a pure bubble, an asset without intrinsic value — its price will fall to zero if trust vanishes. There are undeniably certain successful, long-lasting, bubbles: gold (whose value vastly exceeds the price that it would fetch if it were treated as a raw material and used for industrial or decorative purposes); or even the dollar, the pound or the euro. The history of markets, though, is littered with bubbles ending in crashes, from Dutch tulip bulbs in the 1630s and the South Sea bubble in 1720, to countless stock market and real estate bubbles. No one can say with certainty that bitcoin will crash. It could become the new gold. But I would not bet my savings on it, nor would I want regulated banks to gamble on its value.

The value of ordinary currencies is underwritten by governments and stabilized by central banks acting as trusted monopoly producers. Bitcoin and its rivals leave those vital roles vacant.

Moreover, bitcoin has no fundamental value as an asset — no stream of future income, no ultimate assurance of liquidity or security, and (unlike gold, say) no alternative use. Its scarcity (hence some floor on its value) is purportedly guaranteed by the underlying technology, but most of its buyers simply take that on trust. Should they come to doubt that guarantee, its price will collapse.

In the meantime, bitcoin’s utility as a means of exchange depends on official tolerance — a point rightly emphasized by UBS’s Mark Haefele. That tolerance cannot be taken for granted, especially as bitcoin’s appeal rests so much on the anonymity of its users. At the moment, its comparative advantage is its usefulness for illicit purposes.

All this said, the distributed-ledger technology that underlies bitcoin is potentially very powerful. By reducing the need for central intermediaries, it holds out the promise of processing transactions of various kinds more efficiently than today. Many banks and exchanges are exploring these applications.

Blockchain technology might also be used one day to produce new kinds of central-bank money. Central-bank digital currency could start to replace the electronic payment systems that financial institutions use with each other. A more radical idea is to use digital currency, issued and supervised by the central bank, at the retail level to replace physical cash.

All these ideas are worth study now. And they’ll still be worth pursuing after the bitcoin bubble bursts.

“The bitcoin is a beautiful mathematical object,” said Yves Choueifaty, who has just launched a bitcoin mutual fund at Tobam, the French fund manager he founded. But while bitcoin is a wonderful academic creation, it isn’t doing what its founder envisaged: cutting transaction costs and allowing “small casual transactions.”

Instead, bitcoin has become a vehicle for hoarding by libertarians and hard-currency enthusiasts who fear central banks will inflate away their savings, and for gambling by hordes of speculators attracted to its wild price swings.

Analysts can map the relationship between extremists online, and they’ve found that a very small number of social media accounts can be very influential. Sometimes these accounts are unusually engaged or fanatical. But sometimes they are popular because they cross boundaries, posting things from different types of sources, some more mainstream and some more fringe. They have an impact because they normalize the madmen and the conspiracy theorists, give false stories the same status as those which are true, offer tiny grouplets the same exposure as major organizations and, again, enhance their feeling of belonging.

If the president’s account was not the president’s account, then counter-extremist teams in the British government or at the tech companies would now track it, and might eventually suspend it: After all, it has successfully given extremists some mainstream endorsement. But it is the president’s account. And so British leaders have publicly appealed to the vast majority of the country who oppose extremism, dislike violence and now see Trump as a possible source of both.

That President Trump, or someone on his behalf, had the time and inclination yesterday to scroll and click, to drift through the digital wormholes of the far-right and find three videos posted by Fransen, and to share them with forty-four million people is hard enough to believe.

But for his spokeswoman to then assert that, regardless of whether the video is real, “the threat is real” represents an unbelievable disordering of the political fabric. Theresa May, who has been reluctant to criticize Trump for anything since he took office, was forced to draw the line this time.

In short, what his track record shows is that this isn’t a mistake, it’s a strategy. The impact of this strategy is to legitimise those driven by hatred. It makes them think that their views are mainstream, when in fact they are not – and makes those already driven by hatred more likely to act on it.

After his latest spasm of deranged tweets, only those completely under his spell can deny what growing numbers of Americans have long suspected: The President of the United States is profoundly unstable. He is mad. He is, by any honest layman’s definition, mentally unwell and viciously lashing out.

Donald Trump is suffering from psychopathy and has a mental state that poses an “enormous present danger”, a clinical psychiatrist has said. The US President has psychosis and is “a very sick man”, said Dr Lance Dodes, a former assistant professor of clinical psychiatry at Harvard Medical School who now works for the Boston Psychoanalytic Society and Institute.

Trump’s assault — and that of his appointees — on democratic standards and principles is the central element of what might be called a brutalizing or “decivilizational” process. That’s part of what underlies the eternal return of the president’s mendacity, reappearing this month in his behind-the-scenes recitation of lies about Obama’s birthplace and the Access Hollywood tape on which he can be heard bragging about what you can do to women “when you’re a star.”

These developments have revived open discussion of Trump’s mental health. Add to Trump’s list of lies, his race baiting, his attacks on a free press, his charges of “fake news,” his efforts to instigate new levels of voter suppression, his undermining of the legitimacy of the electoral process, his disregard for the independence of the judiciary, the hypocrisy of his personal posture on sexual harassment, the patent lack of concern for delivering results to voters who supported him, his contempt for and manipulation of his own loyalists, his “failure of character” — and you have a lethal corruption of democratic leadership.

The test facing our democracy now is whether the rules of engagement that make the system work can be restored. Trump trampled on those rules and won the presidency. That precedent may, in and of itself, have inflicted irreparable damage.

At the moment, Trump’s co-partisans, House and Senate Republicans, have shown little willingness to confront him. The longer Trump stays in office, the greater the danger that he will inflict permanent damage on the institutions that must be essential tools in any serious attempt to confront him.

Here’s the thing. Mnuchin’s shameless posturing about the administration’s tax plans—at one point he even promised there would be “no absolute tax cut for the upper class,” which was a laugher given every proposal Trump had ever backed—points to a deeper problem. The man regularly says things that just aren’t true. He’s been claiming that there was an analysis underway. There wasn’t. And while a lot of people may roll their eyes about that in the context of a wonky tax debate, his complete lack of credibility is going to be a problem if we ever run into a serious economic or financial crisis. Just ask yourself: If the markets were crashing and Steve Mnuchin held a press conference assuring everybody that the administration had an action plan in the works, would you believe him? His complete detachment from reality has mostly been an infuriating sideshow during this tax push. If stuff ever really hits the fan, though, his reputation for fibbing is going to make things even worse. Just like someone else we know.

Some of this re-engineering is straight out of the traditional Republican playbook. Corporate taxes, along with those on wealthy Americans, would be slashed on the presumption that when people in penthouses get relief, the benefits flow down to basement tenements.

Some measures are barely connected to the realm of taxation, such as the lifting of a 1954 ban on political activism by churches and the conferring of a new legal right for fetuses in the House bill — both on the wish list of the evangelical right.

With a potentially far-reaching dimension, elements in both the House and Senate bills could constrain the ability of states and local governments to levy their own taxes, pressuring them to limit spending on health care, education, public transportation and social services. In their longstanding battle to shrink government, Republicans have found in the tax bill a vehicle to broaden the fight beyond Washington.

The result is a behemoth piece of legislation that could widen American economic inequality while diminishing the power of local communities to marshal relief for vulnerable people — especially in high-tax states like California and New York, which, not coincidentally, tend to vote Democratic.

All of this is taking shape at such extraordinary velocity, absent the usual analyses and hearings, that even the most savvy Washington lobbyist cannot be fully certain of the implications.

In a rational world, Kansas’ notorious experiment with radical business tax cuts, which came to a close this year after a half decade of disaster, would serve as a cautionary tale for the Republicans who are now attempting to pass their own tax bill through Capitol Hill—a historical example to be avoided at all costs. Instead, they’re on the verge of repeating it, nearly step for step.

Instead of a jobs boom, Kansas found itself slogging through years of unimpressive growth and massive budget deficits as its tax base disappeared, forcing lawmakers to cut spending on public schools, colleges, Medicaid, and more. The state’s credit rating was humiliatingly downgraded. Eventually, legislators got fed up with the pain, and this year they finally voted to reverse the cuts, with Republicans joining Democrats to override Brownback’s veto.

As a historian of the Great Depression, I can say: I’ve seen this show before.

In 1926, Calvin Coolidge’s treasury secretary, Andrew Mellon, one of the world’s richest men, pushed through a massive tax cut that would substantially contribute to the causes of the Great Depression. Republican Sen. George Norris of Nebraska said that Mellon himself would reap from the tax bill “a larger personal reduction [in taxes] than the aggregate of practically all the taxpayers in the state of Nebraska.” The same is true now of Donald Trump, the Koch Brothers, Sheldon Adelson and other fabulously rich people.

During the 1920s, Republicans almost literally worshiped business. “The business of America,” Coolidge proclaimed, “is business.” Coolidge also remarked that, “The man who builds a factory builds a temple,” and “the man who works there worships there.” That faith in the Market as God has been the Republican religion ever since. A few months after he became president in 1981, Ronald Reagan praised Coolidge for cutting “taxes four times” and said “we had probably the greatest growth in prosperity that we’ve ever known.” Reagan said nothing about what happened to “Coolidge Prosperity” a few months after he left office.

In 1932, in the depths of the Great Depression, Franklin D. Roosevelt called for “bold, persistent experimentation” and said: “It is common sense to take a method and try it; if it fails, admit it frankly and try another. But above all, try something.” The contrasting position of Republicans then and now is: Take the method and try it. If it fails, deny its failure and try it again. And again. And again.

The Vrede farm is one small sliver of a rotten empire. At the centre are three Indian businessmen, the now infamous Gupta brothers, who stand accused of nothing less than buying a president and selling the future of a nation.

So close have Ajay, Atul and Rajesh “Tony” Gupta become to Jacob Zuma, the controversial president, that South Africans have coined a term — “the Zuptas” — to describe their symbiotic bond. The tangle of corruption and political skulduggery will be at the heart of the five-yearly conference of the African National Congress next month, when the future leadership of the ruling party and, thus, the direction of the entire nation will be decided.

“The essence of this is that you compromise the head of state, that you have the head of state in your pocket,” says Sipho Pityana, a disillusioned veteran of the ANC’s struggle against apartheid and chairman of mining company AngloGold Ashanti. “You disable all the law enforcement institutions and you enable unfettered access to people who owe their positions in office to the pleasure of the president,” he says.

“You have virtual, unfettered right to appoint and fire very senior people in government, including cabinet ministers, intelligence officers, state-owned enterprise people and all key strategic appointments that you think would obstruct or enable your way into the state coffers,” he says. “It is a single-minded penetration of state resources.”

How one immigrant family managed in effect to “capture” a country might be considered an overblown work of fiction — if it did not happen to be broadly substantiated. So familiar to South Africans are many elements of the story that the term “state capture”, once confined to academic studies of the former Soviet Union, is now the stuff of tabloid headlines and barroom chat. The Guptas themselves are a household name. “Everyone,” says the security guard at Vrede, “knows the Guptas”.

Social engineering is a tricky business, and the outcomes are uncertain. Ataturk succeeded in his equally dramatic efforts to remake Turkey along avowedly Western lines. In Iran, on the other hand, the shah’s decadence and modernizing failures triggered a radical backlash that culminated in the Islamic revolution. As it happens, something very similar to the prince’s project has already been tried — next door, in the United Arab Emirates (UAE). What leaders there learned was that a top-down social revolution can’t work by fiat; it requires a profound investment in the people whom it expects to change.

“4,000 lonely deaths a week,” estimated the cover of a popular weekly magazine this summer, capturing the national alarm.

To many residents in Mrs. Ito’s complex, the deaths were the natural and frightening conclusion of Japan’s journey since the 1960s. A single-minded focus on economic growth, followed by painful economic stagnation over the past generation, had frayed families and communities, leaving them trapped in a demographic crucible of increasing age and declining births. The extreme isolation of elderly Japanese is so common that an entire industry has emerged around it, specializing in cleaning out apartments where decomposing remains are found.

“The way we die is a mirror of the way we live,” said Takumi Nakazawa, 83, the chairman of the resident council at Mrs. Ito’s housing complex for the past 32 years.

It’s not inconceivable, given upbeat forward-looking data like the New Orders index in the latest ISM Non-Manufacturing Report on Business, that we get thru 4 consecutive quarters of 3%+ growth in the US. That would break us out of the 2%ish channel we have been in for almost the entirety of the business cycle.

What that means, of course, is that the news is priced in. Market valuations reflect optimism about the economy, now and into the foreseeable future. In fact, I would argue that the signs of ‘irrational exuberance’ – or ‘animal spirits’ or whatever you want to call it – are all around us. In the US, this is true whether you look at high grade or high yield credit. And whether you look at bonds or equities.

This is where the danger lies. And I would argue it’s not about bubbles popping. The housing market in Australia shows you that markets deemed overvalued can maintain that overvaluation for a long time as long as the economic backdrop is favourable. The risk here is policy — policy error to be precise. And I have to come back to the flat yield curve here to make this point.

The big picture then is this: a global economy into its ninth year of the business cycle that is starting to gain momentum with the US flirting with 3% growth and 4% unemployment with richly priced asset markets but a flattening yield curve.

We’ve seen this picture before. In fact, in the post-Bretton Woods era of floating exchange rates since the early 1970s, every economic cycle in the US has ended with a Fed tightening cycle that pushed the yield curve to inversion.

USA ECONOMY DATA, CITIES AND STATES

“Economic growth appears to have stepped up from its subdued pace early in the year,” she told the Congressional committee. “Moreover, the economic expansion is increasingly broad, based across sectors as well as across much of the global economy.”

The hearing may have been Ms. Yellen’s last appearance before Congress in her current role. Her four-year term as the Fed chairwoman ends in early February, and she has said that she plans to leave as soon as her successor is sworn in. President Trump has nominated Jerome H. Powell, a Fed governor since 2012, to serve as the its next chairman.

Global stocks are on track to hold their 13th monthly gain in November, the longest winning streak ever. Should the MSCI All-Country World Index rise again next month, it would be the first time in its three-decade history that the gauge has completed an entire calendar year without a monthly decline.

A strong manufacturing performance helped India’s economy expand 6.3 per cent in the three months to September, reversing more than a year of declining growth in the wake of the country’s crackdown on the use of cash.

POSITIONING, INFLECTION, MARKET CALLS

Bearish bets on U.S. retailers are closing up shop faster than RadioShack. The SPDR S&P Retail exchange-traded fund, ticker XRT, saw short interest as a percentage of current shares outstanding plunge from a whopping 366 percent to below 175 percent in the first two weeks of November, according to exchange data. The ETF advanced by roughly 12 percent this month.

“There’s a short squeeze here,” said Eric Balchunas, ETF analyst at Bloomberg Intelligence. “XRT is being lent by people who borrowed it, so the release valve when that happens is they have to create new shares.

COLOR, EARNINGS, SENTIMENT, VALUATIONS

Blue Apron Holdings Inc. Chief Executive Officer and co-founder Matt Salzberg has stepped down from the top role at the meal-kit company beset by production problems and slowing sales growth projections.

REAL ESTATE, HOUSING, REITS, COMMERCIAL

In Miami Beach, a roughly 5,300-square-foot house built on the top floor of an ultra-luxurious garage goes on the market.

This is no ordinary garage. Fronted by a glass sculpture by artist Dan Graham, the roughly 300-space garage has ceilings around 30 feet high in places. A portion of the garage, which has sweeping views of the Miami skyline, can be rented out for weddings and other events (Mr. Wennett noted that the garage is cleaned daily and is power-washed before every event to remove any traces of the cars that regularly park there.)

The ripples from the firing of Matt Lauer as the co-host of the “Today” morning news show have hit the world of New Zealand property, where officials are already scrutinizing the role of foreign buyers in an increasingly expensive market.

A New Zealand government agency said on Thursday that it was in discussions with Mr. Lauer’s representative over his purchase of a 16,000-acre farm there. Foreigners must pass a good-character test to be allowed to buy New Zealand land, and while Mr. Lauer’s purchase was approved earlier this year, the country’s Overseas Investment Office is revisiting his case in light of his firing.

Neil Chriss is shuttering his $2.2 billion hedge fund firm and returning all capital to investors, joining several veteran managers calling it quits this year.

“We have not delivered on our performance goals for three years in a row,” Chriss said in a letter to investors dated Nov. 30. “During this period, we sought to adapt and invest in talent and strategies to ensure we had the best team to generate long term results for our investors. We fought hard, but did not deliver the performance that you expected from us.”

Hutchin Hill Capital, which invests across markets with teams trading different strategies, is the latest in a stream of firms to close this year. Eric Mindich’s Eton Park, Hugh Hendry’s Eclectica Fund, Whitney Tilson’s Kase Capital Management and Acrospire Investment Management have also shut down. In the second quarter of this year, an estimated 222 funds closed, according to Hedge Fund Research Inc., making it the seventh quarter in a row where more shuttered than launched.

POLLUTION, CLIMATE & ENVIRONMENT

Osman’s is a common sort of story in Iraqi Kurdistan, where farmers face a dizzying array of problems, from drought and polluted water supplies, to ruthless urban expansion and an influx of cheap imports. Endowed with a temperate climate and fertile soil, the Kurdistan region was once known as Iraq’s breadbasket. In 1980 the area supplied about half of the country’s wheat, as well as barley and a variety of vegetables. Today the main wholesale market in Erbil, the regional capital, is packed with trucks from Turkey and Iran and produce from as far as China. “We get zero support,” one Kurdish farmer says as he unloads tomatoes.

Food security is a paramount issue in a region that depends heavily on other countries for produce, meat, and dairy. About two-thirds of onions and tomatoes, and more than a third of potatoes, were imported in 2015, according to the Kurdistan Region’s Ministry of Agriculture and Water Resources. Large amounts of fruits such as oranges, bananas, and apples also come from abroad. Turkey and Iran are key suppliers, and both oppose the region’s secession because they fear it will embolden their own Kurdish minorities.

A rare magnitude 4.1 earthquake occurred in eastern Delaware, about six miles northeast of Dover, at 4:47 p.m. eastern Thursday. The tremor was centered in Bombay Hook National Wildlife Refuge along the Delaware Bay.

BREXIT, SCOXIT, LONDON, UK ECONOMY

Tower 185, Frankfurt’s largest office building, has been sold for €775m, in a “hotly contested” transaction that highlights how Brexit has buoyed the German financial centre’s property market. So far 15 global banks have announced they will move some operations from London to Frankfurt in preparation for the UK’s planned 2019 departure from the EU.

Net migration to the U.K. dropped by a record 106,000 in the year following the Brexit referendum as European Union nationals arrived in fewer numbers, a trend welcomed by some lawmakers and deplored by businesses.

Angela Merkel’s attempt to lure a reluctant Social Democratic party back into a “grand coalition” with her conservative bloc started in earnest on Thursday, in a two-hour meeting with her main political rival.

The talks with SPD chief Martin Schulz were held under the auspices of federal president Frank-Walter Steinmeier, who has played a crucial role in ushering party leaders back to the negotiating table. Horst Seehofer, the head of the Christian Social Union, the Bavarian sister party of Ms Merkel’s Christian Democrat Union, also attended.

Merkel fatigue is spreading in large parts of Germany — and even her own party is not immune. The CDU rank-and-file are becoming increasingly critical. Local functionaries and young activists routinely call for her resignation, an act of insubordination once unthinkable in such a hierarchical party.

CHINA

Tens of thousands have already been uprooted in the city’s most aggressive drive against migrant neighborhoods that people can recall; many more migrants are wondering how much longer they can remain in their homes, or even in Beijing.

The city government says they are being pushed out for their own safety, after a recent deadly fire in a migrant settlement. But many migrants say the government is using the fire as an excuse to ramp up efforts to drive them out and ease pressures in a city whose population has already soared beyond 20 million people.

As Washington begins to pursue sanctions against Myanmar’s Army for what American and United Nations officials call a campaign of ethnic cleansing against the Rohingya Muslim minority, China is taking advantage and filling the gap.

In November 2014, when China launched Hong Kong-Shanghai Stock Connect, a pipeline designed to facilitate two-way flows between two hitherto largely sealed off equity markets, identical stocks listed on both exchanges were, on average, 2.1 per cent more expensive in Shanghai.

After three years of operation, during which a net Rmb920bn ($142bn) has flowed through this conduit and a sister HK-Shenzhen channel opened a year ago, the typical premium that dual-listed stocks trade at on the mainland market has ballooned to 30 per cent. Some of the price differentials between identical stocks, with identical voting rights and dividend streams, are extraordinary.

JAPAN

Japan leads the world in advanced robotics. Many of its firms see great potential in “carerobos” that look after the elderly. Over a quarter of the population is over 65, the highest proportion of any country in the OECD. Care workers are in desperately short supply, and many Japanese have a cultural affinity with robots.

GEOPOLITICS, CRIME, TERRORISM

One of the African Union’s top officials, Moussa Faki Mahamat, told the gathered leaders that by his organization’s estimates, there could be anywhere between 400,000 to 700,000 African migrants stuck in Libya against their will. The plans drafted Wednesday indicate that the first evacuation push will target 3,800 migrants.

Turkish President Recep Tayyip Erdogan personally approved widening a scheme to help Iran move funds to skirt American sanctions, a witness has told a New York trial that threatens to implicate the upper reaches of the Ankara government.

The Pentagon will indefinitely delay a ban on the use of older types of cluster bombs due to take effect on Jan. 1, 2019, U.S. officials tell Reuters, saying safety improvements in munitions technology failed to advance enough to replace older stockpiles.

PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE

Tencent and Alibaba are among the firms that assist authorities in hunting down criminal suspects, silencing dissent and creating surveillance cities. Their efforts are part a state campaign to build one of the world’s most ambitious surveillance systems.

Google is being taken to court, accused of collecting the personal data of millions of users, in the first mass legal action of its kind in the UK. It focuses on allegations that Google unlawfully harvested information from 5.4 million UK users by bypassing privacy settings on their iPhones.

Reporters started immediately trying to find the now-former Twitter contractor to try to figure out what happened. If it was an accident, how could it happen? If it was intentional, why did it happen?

We were among those looking for the contractor, and through a string of events found out his name, Bahtiyar Duysak, and got him to agree to talk to us in a town in Germany.

Duysak, a twenty-something with Turkish roots who was born and raised in Germany, was working as a contractor for a fixed term for the last part of his stay in the U.S. under a work and study visa. In addition to his role at Twitter with Pro Unlimited, other assignments had included stints in monetization at Google and YouTube via another contractor, Vaco.

BANKS, BROKERS, INSURANCE, EXCHANGES

The head of UBS has lashed out against regulators’ efforts to rein in bankers’ pay, arguing that the push is fuelled by envy among less well paid officials and risked stoking the populist backlash against capitalism.

MEDIA, CABLE, SPORTS, ENTERTAINMENT

The company, Bored Panda, might not be familiar to you. But if you have a Facebook account and a pulse, you’ve probably seen its handiwork. Maybe it was “10+ Before-and-After Pics That Prove Men Look Better With Beards,” or “41 Times Uber Drivers Surprised Their Clients.” Or perhaps you watched “Shh, Don’t Wake Them,” a 49-second video montage of dogs, cats and hamsters sleeping peacefully.

Lightweight and inoffensive posts like these have made Bored Panda one of the biggest attractions on Facebook. Its page received more than 30 million likes, shares, comments and reactions last month, far more than companies like BuzzFeed, CNN and The New York Times, according to NewsWhip, which compiles data on social media publishers. Its website had 116 million visitors in October, according to its internal analytics.

AUTOS, ELECTRIC, SELF-DRIVING

“Autonomous driving is one of the most difficult software challenges of the decade, if not the century,” says Kyle Vogt, the face of GM’s automation efforts. And yet, improbably, the sleepy old automaker is a contender to solve it.

Detroit’s driverless comeback wasn’t homemade. GM owes its resurgence to the AI acumen and good name of San Francisco startup Cruise Automation, Vogt’s company, which it acquired last year for $581 million. (If Cruise meets certain deadlines that come with incentive payments, it’ll wind up clearing almost $1 billion.) “GM is a leader because Cruise has allowed them to attract amazing talent,” says Reilly Brennan, a partner at Trucks Venture Capital who lectures at Stanford.

Some elements of the car buying public like to fall for the “it was made by hand” rhetoric for luxury models, but I can confirm that no automaker in the world aims for less automation, not more. This is especially true as one goes up the curve in terms of volume, and that is the problem facing Tesla now. The company has shown no evidence that it can produce luxury cars at a proper linespeed and now it is attempting to build a mass-market vehicle, the Model 3.

That’s the existential problem with Tesla, and the reason its $50 billion valuation is incomprehensible to my friends at other automakers. Tesla can’t produce cars in the needed volume to hit its gross margin target of 25%, and the amount of re-work needed just to produce a salable Tesla ensures that target is illusory as Tesla enters the mass-market.

Volkswagen’s VW brand will build one or two electric vehicles in the U.S. by 2023, probably at its Chattanooga, Tenn. factory, as tougher emissions rules drive the auto industry toward mass production of battery powered cars.

AIRLINES, SHIPPERS, RAIL, TRANSPORTS

American is not the only airline that has suffered expensive IT glitches. In recent years computer-system crashes have caused thousands of flight cancellations, including on British Airways and Delta. But the potential for chaos is even greater around Christmas and New Year’s, when passenger volumes balloon and there is little space on other flights to rebook. This Gulliver, scheduled to fly American on December 28th, is closely monitoring the situation out of more than professional interest. According to the pilots’ union, there are currently flights without pilots scheduled to fly out of cities including Boston, Charlotte, Dallas, Philadelphia, Chicago, Miami, and, yes, Gulliver’s hometown of Washington, D.C.

Dozens of firms are working on electrically powered planes of all shapes and sizes. Some resemble flying cars, such as those which Larry Page, one of Google’s founders, is backing. Others are hovering, drone-like machines that could operate as autonomous aerial taxis (Uber is keen on these). Pipistrel, a Slovenian company, already makes a two-seater electric training plane. Another two-seater, the E-fan, has been flown by Airbus, a European aviation giant, although it recently abandoned the project.

The reason for that became clear on November 28th, when Airbus announced something more ambitious. It has teamed up with Rolls-Royce, a British jet-engine producer, and Siemens, a German electricals group, to convert a small airliner into a “flying test bed” to prove the feasibility of hybrid-electric propulsion. “We are entering a new world of aviation,” said Frank Anton, head of Siemens eAircraft. Electric power, he predicted, would prove to be as significant to commercial aviation as the invention of the jet engine.

HEALTH, PRODUCTIVITY AND WELLNESS

HVMN, a San Francisco start-up backed by former Yahoo CEO Marissa Mayer and Andreessen Horowitz, advertises its $40-a-bottle supplements as “biohacking” compounds that will help people achieve “optimal human performance.”

But CNBC has learned that the first clinical trial study commissioned by HVMN (pronounced “human”) found that one of its best-selling supplements was less effective in many ways than a cup of coffee.

After the disappointing results in May, sources said the company hoped to delay publication of the study and asked researchers to change the name of the product to distance it from the analysis.

MISCELLANEOUS

Gomer Pyle, the character that so indelibly stamped Mr. Nabors’s career, originated in 1962 as a supporting role on “The Andy Griffith Show,” a bucolic CBS comedy that had been running since 1960. Gomer was a guileless, sweet-natured gas-station attendant in Mayberry, N.C., a sleepy fictional town where Mr. Griffith played the widower sheriff, Don Knotts his deputy, Ron Howard his son and Frances Bavier his matronly Aunt Bee.

Mr. Nabors’s character, a village innocent who tended to make a mess of things, became a favorite, and his sheepish “gawwwleee” and wide-eyed “shazam!” became popular catchphrases.

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